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Judgment
This appeal was admitted on July 18, 2012 for considering the following substantial questions of law:
Whether the order passed by the Board in holding that discount allowed to retailers as per ordinary trade practice of the appellant by way of credit notes as not deductible from sale price is perverse in law and on facts and contrary to the decision of the Supreme Court in IFB Industries Ltd. Vs. State of Kerala,
The appellant herein was assessed for tax under the commercial tax law for assessment year 2002-03 and the only question involved in this appeal is as to whether the discount allowed by the appellant herein a retail dealer as per ordinary trade practice by way of credit note cannot be subjected to deduction from the sale price of the vehicle or not?
It was the case of the Revenue that without indicating the rebate or discount granted in the vouchers and sale document no deduction from the amount of the sale price is permissible. It has been held by the Revenue that the discount claimed for cannot be granted as they are neither indicated in the vouchers nor bills issued to the parties who have purchased the items whereas, it was the case of the appellant that the grant of discount being an admitted position even without there being disclosure in the voucher and bills the same are permissible.
Even though various grounds are raised in this VAT appeal, the question stands decided by the Supreme Court in the case of IFB Industries Ltd. Vs. State of Kerala, . It has been held by the honourable Supreme Court in the aforesaid case that discount through credit note issued even subsequent to a sale without their mention in the sale voucher of the bill is permissible. It has been held that the claim for deduction of the amount of trade discount cannot be disallowed only on the ground that the discount amount were not shown in the sale invoice or the bills issued. The Supreme Court has held that once allowing of discount is established from the material available on record, the same has to be allowed.
Even though in the return respondents by relying upon the judgment rendered in the case of Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam Vs. Advani Oorlikon (P) Ltd., have tried to justify their action but in the case of IFB Industries Ltd. Vs. State of Kerala, , the judgment in the case of Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam Vs. Advani Oorlikon (P) Ltd., has been explained in para 30 and thereafter a decision taken. In view of the law laid down in the judgment of IFB Industries Ltd. Vs. State of Kerala, , the question of law is answered by holding that the appellants are entitled to deduction claimed for with regard to the discount allowed by them as a retailer based on ordinary trade practice by way of issuing credit note even without showing the same in the sale invoice or the bill.
Accordingly, the amount, if any recovered towards tax on this count be now refunded back to the appellant if already recovered. With the aforesaid, this appeal stands allowed and disposed of.